HR 3930 IH

To amend the Federal Water Pollution Control Act to authorize appropriations for State water pollution control revolving funds, and for other purposes.

March 12, 2002

Mr. DUNCAN (for himself and Mr. DEFAZIO) introduced the following bill; which was referred to the Committee on Transportation and Infrastructure, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Federal Water Pollution Control Act to authorize appropriations for State water pollution control revolving funds, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) IN GENERAL- This Act may be cited as the `Water Quality Financing Act of 2002'.

(b) TABLE OF CONTENTS-

Sec. 1. Short title; table of contents.

TITLE I--FINANCING WATER QUALITY IMPROVEMENTS

Sec. 101. Amendment of Federal Water Pollution Control Act.

Subtitle A--Technical and Management Assistance

Sec. 111. Technical assistance.

Sec. 112. State management assistance.

Subtitle B--State Water Pollution Control Revolving Funds

Sec. 121. General authority for capitalization grants.

Sec. 122. Capitalization grant agreements.

Sec. 123. Water pollution control revolving loan funds.

Sec. 124. Allotment of funds.

Sec. 125. Intended use plan.

Sec. 126. Annual Federal oversight review.

Sec. 127. Technical assistance.

Sec. 128. Authorization of appropriations.

Subtitle C--General Provisions

Sec. 151. Definition of treatment works.

Sec. 152. Funding for Indian programs.

TITLE II--PRESERVATION OF REPORTING REQUIREMENTS

Sec. 201. Preservation of reporting requirements.

TITLE III--TAX PROVISIONS

Sec. 301. Bonds for water and sewage facilities exempt from volume cap on private activity bonds.

Sec. 302. Amounts from certain Federal revolving funds not treated as bond proceeds or replacement for bond proceeds for purposes of arbitrage bond rules.

TITLE I--FINANCING WATER QUALITY IMPROVEMENTS

SEC. 101. AMENDMENT OF FEDERAL WATER POLLUTION CONTROL ACT.

Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.).

Subtitle A--Technical and Management Assistance

SEC. 111. TECHNICAL ASSISTANCE.

(a) TECHNICAL ASSISTANCE FOR RURAL AND SMALL TREATMENT WORKS- Section 104(b) (33 U.S.C. 1254(b)) is amended--

(1) by striking `and' at the end of paragraph (6);

(2) by striking the period at the end of paragraph (7) and inserting `; and'; and

(3) by adding at the end the following:

`(8) make grants to nonprofit organizations to provide technical assistance to rural and small municipalities for the purpose of assisting, in consultation with the State in which the assistance is provided, such municipalities to plan, develop, and gain financing for wastewater infrastructure assistance;

`(9) make grants to nonprofit organizations to provide technical assistance and training to rural and small publicly owned treatment works and decentralized wastewater treatment systems to enable such treatment works and systems to protect water quality and achieve and maintain compliance with the requirements of this Act; and

`(10) make grants to nonprofit organizations to disseminate information to rural municipalities, small municipalities, and municipalities that meet the affordability criteria established under section 603(i)(2) by the State in which the municipality is located with respect to planning, design, construction, and operation of publicly owned treatment works and decentralized wastewater treatment systems.'.

(b) AUTHORIZATION OF APPROPRIATIONS- Section 104(u) (33 U.S.C. 1254(u)) is amended--

(1) by striking `and (6)' and inserting `(6)'; and

(2) by inserting before the period at the end the following: `(7) not to exceed $75,000,000 for each of fiscal years 2003 through 2007 for carrying out subsections (b)(3), (b)(8), (b)(9), and (b)(10), except that not less than 20 percent of the amounts appropriated pursuant to this paragraph in a fiscal year shall be used for carrying out subsections (b)(8), (b)(9), and (b)(10)'.

(c) COMPETITIVE PROCEDURES FOR AWARDING GRANTS- Section 104 (33 U.S.C. 1254(b)) is amended by adding at the end the following:

`(v) COMPETITIVE PROCEDURES FOR AWARDING GRANTS- The Administrator shall establish procedures that, to the maximum extent practicable, promote competition and openness in the award of grants to nonprofit private agencies, institutions, and organizations under this section.'.

SEC. 112. STATE MANAGEMENT ASSISTANCE.

Section 106(a) (33 U.S.C. 1256(a)) is amended--

(1) by striking `and' at the end of paragraph (1);

(2) by striking the semicolon at the end of paragraph (2) and inserting `; and'; and

(3) by inserting after paragraph (2) the following:

`(3) such sums as may be necessary for each of fiscal years 1991 through 2002, and $250,000,000 for each of fiscal years 2003 through 2007;'.

Subtitle B--State Water Pollution Control Revolving Funds

SEC. 121. GENERAL AUTHORITY FOR CAPITALIZATION GRANTS.

Section 601(a) (33 U.S.C. 1381(a)) is amended by striking `for providing assistance' and all that follows through the period at the end and inserting the following: `to accomplish the objectives, goals, and policies of this Act by providing assistance for projects and activities identified in section 603(c).'.

SEC. 122. CAPITALIZATION GRANT AGREEMENTS.

(a) REQUIREMENTS FOR CONSTRUCTION OF TREATMENT WORKS- Section 602(b)(6) (33 U.S.C. 1382(b)(6)) is amended--

(1) by striking `before fiscal year 1995'; and

(2) by striking `201(b)' and all that follows through `513' and inserting `211, 218, and 511(c)(1)'.

(b) REPORTING INFRASTRUCTURE ASSETS- Section 602(b)(9) (33 U.S.C. 1382(b)(9)) is amended by striking `standards' and inserting `standards, including standards relating to the reporting of infrastructure assets'.

(c) ADDITIONAL REQUIREMENTS- Section 602(b) (33 U.S.C. 1382(b)) is amended--

(1) by striking `and' at the end of paragraph (9);

(2) by striking the period at the end of paragraph (10) and inserting a semicolon; and

(3) by adding at the end the following:

`(11) the State will establish, maintain, invest, and credit the fund with repayments, such that the fund balance will be available in perpetuity for providing financial assistance in accordance with this title;

`(12) any fees charged by the State to recipients of assistance will be deposited in the fund for the sole purpose of financing the cost of administering the fund;

`(13) beginning in fiscal year 2004, the State will include as a condition of providing assistance under section 603(c)(1) that the recipient of such assistance--

`(A) conduct a physical and operational analysis of any system proposed for repair, replacement, or expansion;

`(B) study and evaluate the cost and effectiveness of innovative and alternative processes, materials, and techniques for carrying out projects and activities eligible for such assistance under section 603(c), and select, to the extent practicable, projects and activities that more efficiently use energy and natural and financial resources or provide greater environmental benefits;

`(C) analyze the cost and effectiveness of alternative management and financing approaches (including rate structures, issuance of bonds, restructuring, regional alternatives, consolidation, and public-private partnerships) for carrying out a project or activity for which assistance is provided under this title, taking into account the cost of operating and maintaining the project or activity over its life, as well as the cost of constructing the project or activity; and

`(D) develop and implement a plan for maintaining, repairing, and, as necessary, replacing any infrastructure to be constructed with assistance under this title, and for funding such maintenance, repair, and replacement;

`(14) the State will not provide assistance under this title for the construction of publicly owned treatment works unless the recipient of such assistance has adopted or will adopt a system of charges or dedicated ad valorem taxes sufficient to pay, at a minimum, the costs of operation and maintenance (including replacement) of any wastewater service provided by the recipient, and will otherwise comply with section 204(b)(1);

`(15) the State will not provide assistance under this title for the construction of publicly owned treatment works unless the recipient of such assistance has the legal, institutional, managerial, and financial capability to ensure adequate construction, operation, and maintenance of treatment works throughout the recipient's jurisdiction; and

`(16) the State will use at least 15 percent of the amount of each capitalization grant received by the State under this title after September 30, 2003, to provide assistance to municipalities of fewer than 20,000 individuals that meet the affordability criteria established by the State under section 603(i)(2) for activities included on the State's priority list established under section 603(g), to the extent that there are sufficient applications for such assistance.'.

SEC. 123. WATER POLLUTION CONTROL REVOLVING LOAN FUNDS.

(a) PROJECTS AND ACTIVITIES ELIGIBLE FOR ASSISTANCE- Section 603(c) (33 U.S.C. 1383(c)) is amended to read as follows:

`(c) PROJECTS AND ACTIVITIES ELIGIBLE FOR ASSISTANCE- The amounts of funds available to each State water pollution control revolving fund shall be used only for providing financial assistance--

`(1) to any municipality, intermunicipal, interstate, or State agency for construction of publicly owned treatment works;

`(2) for the implementation of a management program established under section 319;

`(3) for development and implementation of a conservation and management plan under section 320;

`(4) for the implementation of lake protection programs and projects under section 314;

`(5) for decentralized wastewater treatment systems that treat domestic sewage;

`(6) for measures to reduce municipal stormwater runoff;

`(7) for measures to reduce the demand for publicly owned treatment works capacity through water conservation;

`(8) for measures to increase the security of publicly owned treatment works; and

`(9) for the development and implementation of watershed projects meeting the criteria set forth in section 121.'.

(b) EXTENDED REPAYMENT PERIOD- Section 603(d)(1) (33 U.S.C. 1383(d)(1)) is amended--

(1) in subparagraph (A) by inserting after `20 years' the following: `or, in the case of a municipality that meets the affordability criteria established under section 603(i)(2) by the State in which the municipality is located, the lesser of 30 years or the design life of the project to be financed with the proceeds of the loan'; and

(2) in subparagraph (B) by striking `not later than 20 years after project completion' and inserting `upon the expiration of the term of the loan'.

(c) ADMINISTRATIVE EXPENSES- Section 603(d)(7) (33 U.S.C. 1383(d)(7)) is amended by inserting before the period at the end the following: `, $400,000 per year, or 1/5 percent per year of the current valuation of the fund, whichever amount is greatest, plus the amount of any fees collected by the State for such purpose'.

(d) TECHNICAL AND PLANNING ASSISTANCE FOR SMALL SYSTEMS- Section 603(d) (33 U.S.C. 1383(d)) is amended--

(1) by striking `and' at the end of paragraph (6);

(2) by striking the period at the end of paragraph (7) and inserting `; and'; and

(3) by adding at the end the following:

`(8) to provide to small treatment works (as defined in section 607) technical and planning assistance and assistance in financial management, user fee analysis, budgeting, capital improvement planning, facility operation and maintenance, repair schedules, and other activities to improve wastewater treatment plant management and operations; except that such amounts shall not exceed 2 percent of grant awards to such fund under this title.'.

(e) ADDITIONAL SUBSIDIZATION- Section 603 (33 U.S.C. 1383) is amended by adding at the end the following:

`(i) ADDITIONAL SUBSIDIZATION-

`(1) IN GENERAL- In any case in which a State provides assistance under subsection (d), the State may provide additional subsidization, including forgiveness of principal and negative interest loans, for projects and activities eligible for assistance under section 603(c)(1)--

`(A) to benefit a municipality that meets the State's affordability criteria established under paragraph (2);

`(B) to benefit a municipality that does not meet the State's affordability criteria if the recipient--

`(i) seeks additional subsidization to benefit individual ratepayers in the residential user rate class;

`(ii) demonstrates to the State that such ratepayers will experience a significant hardship from the increase in rates necessary to finance the activity; and

`(iii) ensures, as part of an assistance agreement between the State and the recipient, that the additional subsidization provided under this paragraph is directed through a user charge rate system (or other appropriate method) to such ratepayers; or

`(C) to implement alternative processes, materials, and techniques (including nonstructural protection of surface waters, new or improved methods of waste treatment, and pollutant trading) that may result in cost savings or increased environmental benefit when compared to standard processes, materials, and techniques.

`(2) AFFORDABILITY CRITERIA-

`(A) ESTABLISHMENT- On or before September 30, 2003, and after providing notice and an opportunity for public comment, a State shall establish affordability criteria to assist in identifying municipalities that would experience a significant hardship raising the revenue necessary to finance a project or activity eligible for assistance under section 603(c)(1) if additional subsidization is not provided. Such criteria shall be based on income data, population trends, and other data determined relevant by the State.

`(B) EXISTING CRITERIA- If a State has previously established, after providing notice and an opportunity for public comment, affordability criteria that meet the requirements of subparagraph (A), the State may use the criteria for the purposes of this subsection. For purposes of this Act, any such criteria shall be

treated as affordability criteria established under this paragraph.

`(C) INFORMATION TO ASSIST STATES- The Administrator may publish information to assist States in establishing affordability criteria under subparagraph (A).

`(3) PRIORITY- A State may give priority to a recipient for a project or activity eligible for funding under section 603(c)(1) if the recipient meets the State's affordability criteria.

`(4) SET-ASIDE-

`(A) IN GENERAL- In any fiscal year in which the Administrator has available for obligation more than $1,400,000,000 for the purposes of this title, a State shall provide additional subsidization under this subsection in the amount specified in subparagraph (B) to eligible entities described in paragraph (1) for projects and activities identified in the State's intended use plan prepared under section 606(c) as projects and activities to be supported, to the extent that there are sufficient applications for such assistance.

`(B) AMOUNT- In a fiscal year described in subparagraph (A), a State shall set aside for purposes of subparagraph (A) an amount not less than 25 percent of the difference between--

`(i) the total amount that would have been allotted to the State under section 604 for such fiscal year if the amount available to the Administrator for obligation under this title for such fiscal year had been equal to $1,400,000,000; and

`(ii) the total amount allotted to the State under section 604 for such fiscal year.

`(5) LIMITATION- The total amount of additional subsidization provided under this subsection by a State may not exceed 30 percent of the total amount of capitalization grants received by the State under this title in fiscal years beginning after September 30, 2002.'.

SEC. 124. ALLOTMENT OF FUNDS.

(a) IN GENERAL- Section 604(a) (33 U.S.C. 1384(a)) is amended to read as follows:

`(a) ALLOTMENTS-

`(1) FISCAL YEARS 2002 AND 2003- Sums appropriated to carry out this title for each of fiscal years 2002 and 2003 shall be allotted by the Administrator in accordance with section 205(c).

`(2) FISCAL YEAR 2004 AND THEREAFTER- Sums appropriated to carry out this title for fiscal year 2004 and each fiscal year thereafter shall be allotted by the Administrator as follows:

`(A) Amounts up to $1,350,000,000 shall be allotted in accordance with section 205(c).

`(B) Amounts that exceed $1,350,000,000 shall be allotted in accordance with the formula developed by the Administrator under subsection (d).'.

(b) FORMULA- Section 604 (33 U.S.C. 1384) is amended by adding at the end the following:

`(d) FORMULA BASED ON WATER QUALITY NEEDS- Not later than September 30, 2003, and after providing notice and an opportunity for public comment, the Administrator shall publish an allotment formula based on water quality needs in accordance with the most recent survey of needs developed by the Administrator under section 516(b).'.

SEC. 125. INTENDED USE PLAN.

(a) INTEGRATED PRIORITY LIST- Section 603(g) (33 U.S.C. 1383(g)) is amended to read as follows:

`(g) PRIORITY LIST-

`(1) IN GENERAL- For fiscal year 2004 and each fiscal year thereafter, a State shall establish or update a list of projects and activities for which assistance is sought from the State's water pollution control revolving fund. Such projects and activities shall be listed in priority order based on the methodology established under paragraph (2). The State may provide financial assistance from the State's water pollution control revolving fund only with respect to a project or activity included on such list.

`(2) METHODOLOGY-

`(A) IN GENERAL- Not later than 1 year after the date of enactment of this paragraph, and after providing notice and opportunity for public comment, each State (acting through the State's water quality management agency and other appropriate agencies of the State) shall establish a methodology for developing a priority list under paragraph (1).

`(B) PRIORITY FOR PROJECTS AND ACTIVITIES THAT ACHIEVE GREATEST WATER QUALITY IMPROVEMENT- In developing the methodology, the State shall seek to achieve the greatest degree of water quality improvement, taking into consideration section 602(b)(5), section 603(i)(3), and whether such water quality improvements would be realized without assistance under this title.

`(C) CONSIDERATIONS IN SELECTING PROJECTS AND ACTIVITIES- In determining which projects and activities will achieve the greatest degree of water quality improvement, the State shall consider--

`(i) information developed by the State under sections 303(d) and 305(b);

`(ii) the State's continuing planning process developed under section 303(e); and

`(iii) the State's management program developed under section 319.

`(D) EXISTING METHODOLOGIES- If a State has previously developed, after providing notice and an opportunity for public comment, a methodology that meets the requirements of this paragraph, the State may use the methodology for the purposes of this subsection.'.

(b) INTENDED USE PLAN- Section 606(c) (33 U.S.C. 1386(c)) is amended--

(1) in the matter preceding paragraph (1) by striking `each State shall annually prepare' and inserting `each State (acting through the State's water quality management agency and other appropriate agencies of the State) shall annually prepare and publish';

(2) by striking paragraph (1) and inserting the following:

`(1) the State's priority list developed under section 603(g);';

(3) by striking `and' at the end of paragraph (4);

(4) by striking the period at the end of paragraph (5) and inserting `; and'; and

(5) by adding at the end the following:

`(6) if the State does not fund projects and activities in the order of the priority established under section 603(g), an explanation of why such a change in priority is appropriate.'.

(c) TRANSITIONAL PROVISION- Before completion of a priority list based on a methodology established under section 603(g) of the Federal Water Pollution Control Act (as amended by this section), a State shall continue to comply with the requirements of sections 603(g) and 606(c) of such Act, as in effect on the day before the date of enactment of this Act.

SEC. 126. ANNUAL FEDERAL OVERSIGHT REVIEW.

Section 606(e) (33 U.S.C. 1386(e)) is amended by adding at the end the following: `In carrying out an oversight review under this subsection, the Administrator may allow a State to certify, with supporting documentation, its compliance with the requirements of this title.'.

SEC. 127. TECHNICAL ASSISTANCE.

Title VI (33 U.S.C. 1381 et seq.) is amended--

(1) by redesignating section 607 as section 608; and

(2) by inserting after section 607 the following:

`SEC. 607. TECHNICAL ASSISTANCE.

`(a) ASSISTANCE FOR SMALL TREATMENT WORKS-

`(1) SIMPLIFIED PROCEDURES- Not later than 1 year after the date of enactment of this section, the Administrator shall assist the States in establishing simplified procedures for small treatment works to obtain assistance under this title.

`(2) PUBLICATION OF MANUAL- Not later than 2 years after the date of the enactment of this section, and after providing notice and opportunity for public comment, the Administrator shall publish a manual to assist small treatment works in obtaining assistance under this title and publish in the Federal Register notice of the availability of the manual.

`(3) SMALL TREATMENT WORKS DEFINED- For purposes of this title, the term `small treatment works' means a treatment works for which a municipality or intermunicipal, interstate, or State agency seeks assistance under this title and which serves a population of 20,000 or fewer.

`(b) ASSISTANCE FOR IMPROVING THE MANAGEMENT OF WATER QUALITY INFRASTRUCTURE AND INCREASING COST-EFFECTIVENESS OF INFRASTRUCTURE IMPROVEMENTS- At the request of any State, the Administrator shall assist in the development of criteria for a State to determine compliance with the conditions of funding assistance established under section 602(b)(13).'.

SEC. 128. AUTHORIZATION OF APPROPRIATIONS.

Section 608 (as redesignated by section 127 of this Act) is amended by striking paragraphs (1) through (5) and inserting the following:

`(1) $2,000,000,000 for fiscal year 2003;

`(2) $3,000,000,000 for fiscal year 2004;

`(3) $4,000,000,000 for fiscal year 2005;

`(4) $5,000,000,000 for fiscal year 2006; and

`(5) $6,000,000,000 for fiscal year 2007.'.

Subtitle C--General Provisions

SEC. 151. DEFINITION OF TREATMENT WORKS.

Section 502 (33 U.S.C. 1362) is amended by adding at the end the following:

`(21) The term `treatment works' has the meaning given that term in section 212.'.

SEC. 152. FUNDING FOR INDIAN PROGRAMS.

Section 518 (33 U.S.C. 1377) is amended by striking subsection (c) and inserting the following:

`(c) RESERVATION OF FUNDS-

`(1) IN GENERAL- For fiscal year 1987 and each fiscal year thereafter, the Administrator shall reserve, before allotments to the States under section 604(a), not less than 0.5 percent and not more than 1.5 percent of the funds made available under section 207.

`(2) USE OF FUNDS- Funds reserved under this subsection shall be available only for projects and activities eligible for assistance under section 603(c) to serve--

`(A) Indian tribes;

`(B) former Indian reservations in Oklahoma (as determined by the Secretary of the Interior); and

`(C) Native villages (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602)).'.

TITLE II--PRESERVATION OF REPORTING REQUIREMENTS

SEC. 201. PRESERVATION OF REPORTING REQUIREMENTS.

Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995 (31 U.S.C. 1113 note) does not apply to any report required to be submitted under any of the following provisions of law:

(1) EXEMPTIONS FROM WATER POLLUTION CONTROL REQUIREMENTS FOR EXECUTIVE AGENCIES- Section 313(a) of the Federal Water Pollution Control Act (33 U.S.C. 1323(a)).

(2) GREAT LAKES RESOURCES ON WHICH RESEARCH IS NEEDED- Section 118(d)(2) of the Federal Water Pollution Control Act (33 U.S.C. 1268(d)(2)).

(3) NATIONAL ESTUARY PROGRAM ACTIVITIES- Section 320(j)(2) of the Federal Water Pollution Control Act (33 U.S.C. 1330(j)(2)).

(4) COMPREHENSIVE CONSERVATION AND MANAGEMENT PLAN FOR LONG ISLAND SOUND- Section 119(c)(7) of the Federal Water Pollution Control Act (33 U.S.C. 1269(c)(7)).

(5) IMPLEMENTATION OF GREAT LAKES WATER QUALITY AGREEMENT OF 1978- Section 118(c)(10) of the Federal Water Pollution Control Act (33 U.S.C. 1268(c)(10)).

(6) EFFECTS OF POLLUTION ON NATION'S ESTUARIES- Section 104(n)(3) of the Federal Water Pollution Control Act (33 U.S.C. 1254(n)(3)).

(7) NATIONAL REQUIREMENTS AND COSTS OF WATER POLLUTION CONTROL- Section 516 of the Federal Water Pollution Control Act (33 U.S.C. 1375).

(8) STATUS OF WATER QUALITY IN UNITED STATES LAKES- Section 314(a)(3) of the Federal Water Pollution Control Act (33 U.S.C. 1324(a)(3)).

(9) STATE REPORTS ON WATER QUALITY OF ALL NAVIGABLE WATERS- Section 305(b) of the Federal Water Pollution Control Act (33 U.S.C. 1315(b)).

(10) LEVEL B PLAN ON ALL RIVER BASINS- Section 209(b) of the Federal Water Pollution Control Act (33 U.S.C. 1289(b)).

(11) REPORTS ON CONTRACTS ENTERED INTO RELATING TO PROCUREMENT FROM VIOLATORS OF WATER QUALITY STANDARDS- Section 508(e) of the Federal Water Pollution Control Act (33 U.S.C. 1368(e)).

TITLE III--TAX PROVISIONS

SEC. 301. BONDS FOR WATER AND SEWAGE FACILITIES EXEMPT FROM VOLUME CAP ON PRIVATE ACTIVITY BONDS.

(a) IN GENERAL- Paragraph (3) of section 146(g) of the Internal Revenue Code of 1986 (relating to exception for certain bonds) is amended--

(1) by inserting `(4), (5),' after `(2),', and

(2) by inserting `facilities for the furnishing of water, sewage facilities,' after `wharves,'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act.

SEC. 302. AMOUNTS FROM CERTAIN FEDERAL REVOLVING FUNDS NOT TREATED AS BOND PROCEEDS OR REPLACEMENT FOR BOND PROCEEDS FOR PURPOSES OF ARBITRAGE BOND RULES.

(a) IN GENERAL- Subsection (a) of section 148 of the Internal Revenue Code of 1986 (defining arbitrage bond) is amended by adding at the end the following: `For purposes of this section, proceeds of an issue, and amounts used to replace proceeds of an issue, shall not include any amount derived from a Federal grant or related State contribution made in connection with a revolving fund established in accordance with title VI of the Federal Water Pollution Control Act or section 1452 of the Safe Drinking Water Act.'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to obligations issued or outstanding after the date of the enactment of this Act, but shall not apply for purposes of determining the amount of any payment required to be made on or before such date to the United States under section 148 of the Internal Revenue Code of 1986.

END